Neighborhood School Act of 1981 - Prohibits a Federal court from ordering any student to be assigned or transported to a public school other than that which is nearest to the student's residence unless: (1) such assignment or transportation is incident to attendance at a school of specialized instruction; (2) such assignment is incident to a purpose directly and primarily related to an educational purpose; (3) such assignment is incident to the voluntary attendance of a student; or (4) the requirement of such transportation is reasonable.

Enumerates circumstances under which an assignment or transportation is not reasonable, including if: (1) there are reasonable alternatives available; (2) the plan is likely to have a net harmful effect on the quality of education; or (3) the time or distance traveled exceed by specified amounts the time or distance to the closest public school.